Administrative Guidelines (Mini Programmes)

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July 21st 2009

07-1192 3686 - 08 /abj Appendix 2

Administrative Guidelines (mini programmes)

Audit Instructions

concerning the performance of audits

in connection with the administration of grant funds from mini-programmes

– applicable to single projects

The Audit Instructions presented here describe the auditing tasks that the Danish Ministry of Foreign Affairs (MFA) requires to be carried out in connection with grant funds allocated by DPOD to miniprogramme activities. The authority of the MFA to issue instructions in the area of auditing is contained in document 265 12/9 90 and in the Mini Programme Agreement concluded with DPOD, to which the Audit Instructions presented here are appended.

§ 1.The auditing is to be conducted by a chartered or registered accountant appointed by the competent body of the partner organisation.

(2) If there is a change of auditor, the incoming auditor must approach the outgoing auditor, who is obliged to inform the partner organisation, [Danish member organisation] and the incoming auditor of the reasons for his or her withdrawal.

§ 2. Audits are to be conducted according to recognised international standards (IFAC/INTOSAI).

(2) The auditor must verify the correctness and accuracy of the project accounts and check whether the transactions presented in the accounts are in conformity with the allocated grants, negotiated agreements with [Danish member organisation], contracts concluded, and legislation and other rules for grant management.

§ 3. The scope of the audit is dependent on the administrative structure and proceduresof the partner organisation, including internal control routines and other matters of importance for the presentation of financial statements.

§ 4. Audits are conducted on a regular basis. As part of the auditing, the auditor shall examine the organisational structure and existing procedures of the partner organisationwith special emphasis on accounting, financial management and reliable internal controls. Substantive tests are carried out as a point of departure by means of spot checks of the quality of the vouchers and their correct registration in the accounts, among other things on the basis of an assessment of importance and risk. The auditing procedure should incorporate unannounced cash and asset audits.

(2) During the audit, the auditor must ensure that the partner organisationlays out the final project accounts in accordance with the provisions stipulated in the administrative guidelines. In this regard, the auditor must verify:

• that the accounts are correct and accurate and do not contain any significant errors and omissions,
• that the conditions for the grant have been complied with, including the provisions contained in the agreement with [Danish member organisation],

• that the transactions presented in the accounts are in conformity with the allocated grants and the main purpose of their utilisation, which was agreed with [Danish member organisation],

• whether the audit conducted has given rise to significant remarks or whether qualifications have been expressed. If the auditors expressed qualifications, it shall be mentioned in the auditor’s endorsement on the accounts,
• that the balances in the final project accounts have been reconciled with the general annual accounts of theorganisation.

(3) The auditor must verify that the government grants are deposited in a separate bank account and that all transfers to and from the account have been reconciled with the disbursements from [Danish member organisation]. The auditor must thus be able to verify that grant funds have not been mixed with the partner organisation’s own funds.

§ 5. The management of the partner organisationmust provide the auditor with the information that must be regarded as important for assessing the accounts and for the auditor’s evaluation of the administration, including objectives and results achieved. The management of the partner organisationmust give the auditor access to conduct the examinations, which the auditor finds necessary and ensure that the auditor receives the information and assistance that must be regarded as necessary for conducting the audit.

§ 6. If the auditor - in connection with the administration of the grant funds - becomes aware of offences or significant non-observance of the provisions of the agreement or the basis for the grant, it is the duty of the auditor to immediately notify the management and competent body of the partner organisationand ensure that information concerning the matters discovered is forwarded together with the auditor’s remarks to [Danish member organisation]within two weeks. Failing that, the auditor is obliged to notify [Danish member organisation]. The remarks of the auditor are to be submitted together with the notification.

(2) The same applies if the auditor during the audit or by other means becomes aware that continuation of operations is uncertain for financial or other reasons.

§ 7. The audited project accounts must carry the auditor’s endorsement, stating that the accounts have been audited in accordance with the stipulations and guidelines in the audit instruction here presented. The endorsement should also include qualifications, if any.

§ 8. These instructions will be included as an annex to the agreement between the partner organisationand [Danish member organisation]and enter into force together with the agreement. Before signing the agreement, it is the duty of the partner organisationto obtain confirmation from the appointed auditor that he/she will perform the audit of the received grant funds in compliance with the provisions of these instructions.